What is geopolitical calculus?

geopolitical calculus (noun)

An approach to business decisions about innovation, supply chains, and market participation that factors in global political risks, rivalries, and trade policies.

Geopolitics isn’t just the purview of world leaders these days. Frictions and alliances between countries have broad economic implications for businesses everywhere.

“In every boardroom, every investment committee, and every startup accelerator, geopolitics has to be on the agenda,” said Dame Fiona Murray, associate dean of innovation at MIT Sloan, in a recent presentation organized by MIT Corporate Relations. “We need a new geopolitical calculus through which to make our decisions around innovation, industrialization, and investment.”

Murray identified four geopolitical factors impacting innovation today: 

• The global distribution of innovation ecosystems
• U.S.-China competition
• Export controls, import tariffs, and other levers of economic statecraft
• The politicization of supply chains that underpin advances in energy, mobility, and artificial intelligence

Businesses’ access to resources like rare earth metals, for example, is largely dependent on their home countries’ allyships and rivalries with material suppliers and processors, Murray said.

She advised business strategists at global companies to weigh those factors when pursuing emerging technologies and when evaluating funding sources to avoid “adversarial capital.”

“In all the places that we’re making these essential economic decisions, we need that geopolitical calculus as a lens over our innovation activities,” Murray said.

Why innovators can't afford to ignore geopolitics